Walgreen CEO: No reconciliation with CVS June 9, 2010, 6:58 pm EDT By Nivedita Bhattacharjee and Phil Wahba
NEW YORK (Reuters) - Walgreen Co (NYSE:WAG - News) can make up for any revenue shortfall caused by its split with CVS Caremark Corp (NYSE:CVS - News) over their pharmacy benefits management arrangement, Walgreen's CEO said, noting he sees little chance of reconciliation.
"We've made our decision -- we certainly didn't take this lightly," Greg Wasson told Reuters in an interview on Wednesday.
Walgreen said on Monday it would not be a provider for any new or renewed drug plans handled by CVS's PBM network, saying
CVS was diverting more patients to its own drugstores and that its reimbursement rates did not reflect market rates.
CVS retaliated on Wednesday by announcing it would end Walgreen's participation in its retail pharmacy networks in 30 days.
"Unfortunately they've decided to disrupt the existing patients that we serve for them," Wasson said.
CVS's pharmacy benefits management business administers prescription drug benefits for employers and health plans, as well as a large mail-order pharmacy.
Wasson said Walgreen would work with its pharmacists to help communicate to patients how the management of those benefits will be affected.
Walgreen gets about 7 percent of its revenue from the CVS drug plan business. But Wasson said increased business from its other clients would offset the loss.
"The fact is that 9 out of 10 patients that walk through a Walgreens drugstore are non-CVS Caremark patients -- there's another huge, huge market out there," Wasson said.
Walgreen shares finished the day down 2.6 percent at $29.83, while CVS slipped 1.5 percent to $30.67, both on the New York Stock Exchange.
(Reporting by Nivedita Bhattacharjee and Phil Wahba; editing by Richard Chang and Andre Grenon)